EMAILS REVEAL COLLEGE OFFICIALS KNEW THEY WERE OVERBILLING STATE

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Newly released emails and documents show which current and former senior administrators at the College of the Desert were aware that the district's enrollment figures were inaccurate and the college was overbilling the state – a deception that will cost the district $5.26 million in repayments.

A recent audit by the state Fiscal Crisis & Management Assistance Team characterized the overbilling as potential fraud, though it did not name names.

Beginning in 2003-04, officials at the Palm Desert college used an inaccurate formula for counting enrollment that assumed most classes met for the exact number of hours listed in the catalog. By that calculation, every three-unit class provided 54 hours of instruction per semester.

But in reality, many three-unit classes met for 52 or 53 hours per semester.

The seemingly small discrepancy was significant because college districts receive the bulk of their state funding based on the number of instructional hours served. Applied over thousands of classes per year, the overbilling added up to millions of dollars that should have gone to other districts.

The California Community Colleges Chancellor’s Office first found out about the overbilling in spring 2011 through an anonymous tip. This summer, the chancellor’s office asked the Fiscal Crisis & Management Assistance Team, a state-funded agency, to investigate.

The fiscal team's review found “sufficient evidence to demonstrate that financial statement fraud and mismanagement may have occurred," according to the Nov. 28 report.

In 2004, as the college was transitioning to a new software system for tracking data, a group of senior managers and staff made the decision to calculate enrollment based on the “catalog hours” instead of actual hours served.

On March 8, 2004, former Interim Vice President of Administrative Services Jack Randall sent an email to Florante Roa, a supervisor in the information systems department, saying he had checked with Rocky Young, who was then a vice chancellor of the Los Angeles Community College District, and that Young had said it was acceptable to count all three-unit classes as 54 hours.

Randall copied three other senior managers on the email: Interim Dean of Enrollment Services Carlene Gibson, Dean of Information Systems Bina Isaac and former Vice President of Instruction Gari Browning.

Officials knew the move would inflate hours served. Roa sent an email that same week to Randall, Gibson, Isaac and Browning, saying Gibson had instructed staff to take all classes that met for 50, 51, 52, 53 or 54 hours and change them in the computer system to show they had met for 54 hours.

The final decision to calculate hours this way was made at a March 25, 2004, meeting, according to a memo that shows Gibson, Browning and Randall in attendance, along with Roa and three other staff members.

The memo was forwarded to two other managers: former Dean of Enrollment Services John Loera and former Vice President of Student Services Diane Ramirez.

When a reporter read the March 8 email aloud to Randall, he said he recalled it. He said another college official – he could not remember who – had asked him to talk to Young, the Los Angeles college official, about whether it was possible to use catalog hours. But Randall said he was not responsible for making the decision to count hours that way.

“When they asked me how to do it, I said that’s not how to do it,” said Randall, who now is retired. “I really don’t even recall … the history of the thing. I do know that I didn’t feel comfortable.”

Browning, who is now president of Ohlone College in Fremont, declined to comment because she said she had no detailed memory of the issue. She did not review the emails and said the audit agency had not contacted her.

Loera also declined to comment. Neither Gibson nor Ramirez responded to requests for comment, and Isaac referred questions to college spokeswoman Pam Hunter.

Hunter said college President Joel Kinnamon is doing an internal review based on the audit's findings.

As early as June 2005, Roa and Matthew Breindel, then the coordinator of the college’s institutional research department, told Loera, Isaac and outside attendance consultant John Mullen in emails that the enrollment accounting seemed to be wrong.

In an August 2005 email, Isaac told then-President Maria Sheehan and then-Vice President of Administrative Services Jerry Patton that the new software system, Datatel, originally had been set up correctly to use actual hours but was manually overridden to use incorrect catalog hours. She said this was done under the direction of Randall’s March 8 email.

Randall disputed that characterization in an interview.

"The email I sent to them was not a direction," he said. "It was just saying that’s how they did it in L.A."

Later in August 2005, Isaac told Patton that consultant Mullen had done a sample test to determine the extent of the problem with attendance accounting and found enrollment figures were overstated by 1 percent.

In March 2006, even though Mullen knew the enrollment figures were not accurate, he gave Loera estimates for 2005-06, describing them in an email as “good enough for government work.” Loera forwarded the email to Patton, who submitted them to the chancellor’s office.

The following month, emails show Patton still was mulling over what to do about the overstated figures. In an April 27, 2006, email, Mullen told Isaac that he would “continue the analysis” so that “Jerry and others can set our course on that item for this and subsequent years.”

The corrections still hadn’t been made nearly three years later, in January 2009, when Patton – who had since been promoted to college president – sent an email to Loera stating that Loera's planned meeting with Mullen would be the perfect time to correct “the Datatel problem of over-reporting (full-time equivalent students).”

Still, the problem did not get fixed. In June 2009, Patton sent an email to Ramirez, along with Vice President of Business Affairs Edwin Deas and Vice President of Academic Affairs Farley Herzek, in which he acknowledged that the enrollment counts had an error rate between 2 and 4 percent. He asked for an analysis showing the fiscal impact of correcting the problem.

In July 2009, Patton told Deas, Herzek, Loera and Ramirez that the correction would not be made on the current enrollment report because doing so would cause auditors to question why the counts had changed from preliminary numbers submitted earlier. Patton said the college would instead submit accurate numbers after the end of the fiscal year.

In response, Deas said: “Makes sense although it does entail knowingly submitting incorrect information right now? Is that ok?”

Patton responded, “Yes, as was the last 4-5 years.”

In June 2011, after the chancellor’s office began asking questions about the improper enrollment figures, Patton sent an email to all employees blaming the problem on Datatel.

Patton also noted that the college’s auditors, Lund & Guttry, had never caught the error. While the audits had noted other problems with the district’s attendance accounting, such as missing class rosters from instructors, they never caught that the district was improperly boosting the number of hours that classes met each semester.

At a board of trustees meeting last week, Kinnamon, the college's president, told trustees that there is no evidence anyone benefited financially from overstating the enrollment numbers, according to a district news release.

He said a representative from the Fiscal Crisis & Management Assistance Team would work with the district to validate the 2011-12 enrollment figures before the district submits them to the state chancellor's office. Also, an external forensic accountant will review all issues related to reporting the enrollment figures and will report to Kinnamon.